Ordinance No. 1208ORDINANCE NO. 1208
AN ORDINANCE OF THE CITY OF VERNON,
CALIFORNIA AMENDING SECTION 5.22 AND SECTION
5.31 AND REPEALING SECTION 5.28 OF ARTICLE
II OF CHAPTER 5 OF THE CODE OF THE CITY OF
VERNON, AND ADDING SECTION 5.17 TO ARTICLE I
OF CHAPTER 5 OF THE CODE OF THE CITY OF
VERNON TO INCREASE THE CITY'S BUSINESS
LICENSE TAXES AND MODIFY THE METHODS FOR
CALCULATING SUCH TAXES
THE PEOPLE OF THE CITY OF VERNON DO ORDAIN AS FOLLOWS:
Section 1. Code Amendment Regarding Business License Taxes.
(a) Section 5.22 of Article II of Chapter 5 of the Code of the
City is amended to read as follows:
Section 5.22. Business License Tax Rates.
(a)(1) Every person doing business or engaged in any
business, profession, trade or occupation, or
performing any act, or otherwise dealing in or with
goods, wares or merchandise, and not elsewhere
specifically licensed by other provisions of this
Chapter, shall pay a license tax, which license tax is
based on the average number of persons employed by the
licensee in the City, for each calendar year or
portion thereof for the privilege of doing business in.
the City as follows:
MAXIMUM
FOR EVERY PERSON EMPLOYING:
TAX RATE
0 or 1 employee
$ 750.00
2 to
10 employees
1,150.00
11
to 25 employees
1,550.00
26
to 50 employees
2,150.00
51
to 75 employees
2,875.00
76
to 1:00 employees
3,575.00
101
to 150 employees
4,250.00
151
to 200 employees
4,975.00
201
to 250 employees
5,700.00
251
to 300 employees
6,425.00
MAXIMUM
FOR EVERY PERSON EMPLOYING:
TAX RATE
301 to 400 employees
7,150.00
401 to 500 employees
7,850.00
501 to 600 employees
8,600.00
601 to 700 employees
10,000.00
701 to 800 employees
11,425.00
801 to 900 employees
12,850.00
901 to 1,000 employees
14,275.00
1,001 to 1,100 employees
15,700.00
1,101 to 1,200 employees
17,100.00
1,201 to 1,300 employees
18,500.00
1,301 to 1,400 employees
19,950.00
1,401 to 1,500 employees
21,350.00
1,501 to 1,600 employees
22,775.00
1,601 to 1,700 employees
24,175.00
1,701 to 1,800 employees
25,625.00
1,801 to 1,900 employees
27,025.00
1,901 and more employees
$28,450.00
(2) Absent some other business activity, the
leasing of real property by the owner of that property
does not constitute a business that is subject to the
license tax imposed by this Chapter.
(b) Business License Tax For Warehousing. (1)
In lieu of the per -employee tax set forth in
Subdivision (a) of this Section, every person engaged
in warehousing in the City, including refrigerated
warehousing shall pay the tax set forth in this
Subdivision (b).
(2) For purposes of this Subdivision (b),
"warehousing" means the storage of goods .intended for
distribution to other locations. "Warehousing" does
not include (i) the storage, at a location, of
materials for use by a manufacturing business
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conducted at that location, or (ii) the storage, at a
location, of products manufactured at that location.
(3) Where a person both warehouses at a location
and conducts some other business at that same
location, he or she shall pay both the tax required by
this Subdivision (b), calculated based on the square
footage used for warehousing, and the tax required by
Subdivision (a) of this Section, calculated based on
the employees engaged in the other business. "Square
footage used for warehousing" shall include all square
footage used in warehousing operations, including the
square footage of offices, break rooms and similar
spaces used in warehousing operations. "Employees
engaged in the other business" shall exclude employees
engaged in warehousing operations. Where areas or
employees are used for both warehousing and non -
warehousing operations, such areas and employees shall
be apportioned based on the percentage of time used
for each type of operation. The City Clerk may
promulgate regulations relating to such apportionment.
(4) The minimum warehousing license tax per
location shall be $1,200.00 per year and the maximum
warehousing license tax per location shall be
$11,950.00 per year.
(5) The tax rate, per square foot for warehousing
shall be as follows:
ANNUAL TAX
First 5,000 sq. ft. $1,200.00
All square footage over 5,000 sq. $0.21 per sq. ft.
ft. in addition to the
$1,200.00
(6) For purposes of this Subdivision (b),
"square footage" includes (i) the square footage of
all buildings (or portions of buildings) and (ii)
outdoor square footage used for storage as part of a
warehousing operation. "Square footage" does not
include outdoor square footage used for parking of
motor vehicles.
(7) The tax under, this Subdivision (b) is
measured by the square footage used for warehousing
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because the magnitude of a warehousing operation is
reasonably measured by the amount of square footage
used by the operation. The tax under this Subdivision
(b) is not a tax on real property.
(c) The rates for the business license taxes
imposed in Sections 5.23 through 5.29 are as follows:
CATEGORY
MAXIMUM TAX RATE
(1)
Central Station Industrial
Protective Service (§5.23(a))
(minimum tax)
$2,125.00/yr.
(2)
Auctioneer (§5.24(a))
$725.00/day
(3)
Still Photography (§5.24(b))
$400.00/day
(4)
Taxicab Service (§5.24(c))
$1,075.00/yr.
(5)
Vehicle Towing Service (§5.24(d))
$1,075.00/yr.
(6)
Peddler (§5.25(a))
$1,325.00/yr.
(7,)
Catering Vehicle -Cold Food
(§5.25(b)(1))
$1,150.00/yr.
(8)
Catering Vehicle -Hot Food
(§5.25(b)(1)(i))
(§5.25(b)(1)(ii))
$1,400.00/yr.
(9)
Catering Vehicle -Daily
(§5.25(b)(2)) .
$325.00/day
(10)
Peddler/Caterer-Transfer
(§5.25(d))
$400.00
(11)
Peddler (§5.25(e))
$3,800.Q0/yr.
(12)
Fruit/Vegetable Vendor (§5.25(f))
$1,150.00/yr.
(13)
Junk/Scrape Metal Dealer
(§5.27(a))
$8,550.00/yr.
(14)
Rag or Paper Dealer (§5.27(b))
$5,600.00/yr.
(15)
Secondhand Pipe Dealer (§5.27(c))
$8,550.00/yr.
(16)
Shows, Circuses, etc. (§5.29(a))
$1,075.00/day
(17)
Sideshow (§5.29(b))
$725.00/day
(18) Structure Moving (Deposit) (§5.26) $1,650 per
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CATEGORY MAXIMUM TAX RATE
structure moved
(19) Structure Moving Permit Fee $100 per
(§5.26) structure moved
into, in or
through the
City
(b) Section 5.28 of Article II of Chapter 5 of the Code of
the City is hereby repealed.
(c) Section 5.31 of Article II of Chapter 5 of the Code of
the City is amended to read as follows:
Section 5.31. Adjustment for Inflation. The
rates established by this Article shall be adjusted
annually based upon changes in the Consumer Price
Index for All Urban Consumers (CPI-U), All Items
Index, Los Angeles -Riverside -Orange County, California
Area (1982-84=100) (hereinafter. "CPI") published by
the United States Department of Labor, Bureau of Labor
Statistics. For each tax year, commencing on January
1, in which the CPI for the month of March of the
immediately preceding year is greater than the CPI for
March, 2013, the tax rates for such tax year shall be
equal to the product of (i) the tax rates set forth in
Section 5.22 of this Article multiplied by (ii) a
fraction, the numerator of which is the CPI for the
applicable month of March and the denominator of which
is the CPI existing for March, 2013. For each tax
year in which the CPI for the month of March of the
immediately preceding year is not higher than the CPI.
for March, 2013, the tax rates shall not be reduced
and shall be as set forth in Section 5.22 of this
Article. If, in the future, the CPI is changed so
that the CPI for March, 2013 differs from the CPI for
such month used as of January 1, 2014, the CPI for
such month shall be converted in accordance with the
conversion factor published by the United States
Department of Labor, Bureau of Labor Statistics. The
City Clerk shall annually, no later than December 1 of
each year, submit a written report to the City Council
setting forth the tax rates for the following year
calculated pursuant to this Section. Such adjusted
rates shall be effective automatically, without action
by the City Council, unless the City Council, by
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ordinance or resolution, chooses to set the taxes at
lower rates.
(d) Section 5.17 is added to Article I of Chapter 5 of
the Code of the City to read as follows:
Section 5.17. License Tax For Contractors
Payable Quarterly. Any person who is required to
obtain a license pursuant to this Article may opt to
be licensed on a quarterly basis, provided that (i)
the person does not maintain a fixed place of business
within the City and (ii) no taxes are due from the
person other than the tax calculated pursuant to
Section 5.22(a) of this Chapter. Licenses issued on a
quarterly basis shall be issued on a calendar quarter
basis (i.�. January 1-March 31, April 1-June 30, July
1-September 30 and October 1-December 31). The tax
for each quarter shall be due on the first day of such
quarter and delinquent on the first day of the second
month of such quarter. The quarterly tax shall be
one-fourth of the applicable annual tax. In all other
respects, quarterly taxes shall be administered in the
manner set forth in this Chapter for annual taxes.
Section2. Effective Date. The amendments and modifications
to the City's business license taxes adopted pursuant to this
Ordinance shall take effect commencing on January 1, 2014.
Section3. Other Provisions Not Amended. No other sections or
provisions of Article I and Article II of Chapter 5 of the Code
of the City shall be amended or repealed by this Ordinance.
Such sections and provisions shall remain in full force and
effect as in effect on the date hereof, including those
provisions relating to. the method of collection of the City's
business license taxes, except as otherwise set forth herein.
Section4. Severability. If, for any reason, any portion of
this Ordinance is rendered or declared invalid or unenforceable
by a court or an administrative body of competent jurisdiction
or by reason of any preemptive legislation, the remaining
portions of this Ordinance shall remain in full force and
effect.
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This Ordinance was approved and adopted by the People of
the City of Vernon at the City's April 9, 2013 general municipal
election.
, Interim City Clerk
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Michael McCormick, Mayor
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: May 1, 2013
TO: Daniel Calleros, Police Chief
Kristen Enomoto, Assistant to the City Administrator
Carlos Fandino, Director of Light & Power
William Fox, Finance Director
Leonard Grossberg, Director of Health & Environmental Control
Masami Higa, Assistant Finance Director
David Kimes, Interim Fire Chief
Alex Kung, Assistant to the City Administrator
Joaquin Leon, Deputy City Treasurer
Teresa McAllister, Director of Human Resources
Zaynah Moussa, Deputy City Attorney
Scott Porter, Deputy City Attorney
Dana Reed, Interim City Clerk
James Rodino, Police Captain
Nicholas Rodriguez, City Attorney
Mark Whitworth, City Administrator
S. Kevin Wilson, Director of Community Services & Water
FROM: Deborah Juarez, Records Management Assistant
RE: Ordinance No. 1208 — An Ordinance of the City Council of the City of Vernon, California
Amending Section 5.22 and Section 5.31 and Repealing Section 5.28 of Article II of
Chapter 5 of the Code of the City of Vernon, and Adding Section 5.17 to Article I of
Chapter 5 of the Code of the City of Vernon to Increase the City's Business License Taxes
and Modify the Methods for Calculating Such Taxes
Transmitted herewith is a copy of Ordinance No. 1208 referenced above, which was approved by the
People of the City of Vernon at the City's general municipal election held April 9, 2013.
Thank you.
Attachment
c: Ana Barcia
Shirley Salas
Ordinance No. 1208
REGE:WED
JAN 0,3 z013 STAFF REPORT
CITY CLERK'S OhFIGE'.
CITY ADMINISTRATION
DATE: January 3, 2013
TO: Honorable Mayor and City Council
FROM; Mark C. Whitworth, City Administrator MW1Y�
RE: Proposed Tax Measures for the April 9, 2013 General Municipal Election —
Business License Tax (Measure K); Special Parcel Tax (Measure L); Utility
Users' Tax (Measure M)
Recommendation
It is recommended that the City Council find that adoption of the resolutions proposed in this
staff report are exempt under the California Environmental Quality Act (CEQA) in accordance
with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an
effect on the environment.
It is recommended that the City Council adopt the following resolutions (attached) to place the
respective General Fund tax measures on the April 9, 2013 ballot:
1. RESOLUTION NO.2013-01 A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY
AT THE CITY'S APRIL 9, 2013 GENERAL ELECTION A MEASURE REGARDING
THE CITY'S BUSINESS LICENSE TAXES
2. RESOLUTION NO.20I3-02 — A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY
AT THE CITY'S APRIL 9, 2013 GENERAL ELECTION A SPECIAL PARCEL TAX
MEASURE
3. RESOLUTION NO. 2013-03 —A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY
AT THE CITY'S APRIL 9, 2013 GENERAL ELECTION A UTILITY USERS' TAX
MEASURE
Backeround
In line with the good governance reforms respecting the City's budgeting policies and practices,
City staff has been working diligently in recent years to develop a long-term solution to the
General Fund's structural deficit. After significant participation and input from the business and
residential communities, the City has developed a viable, long-term solution in the form of the
three -pronged tax proposal explained in this staff report. Simultaneously, the City has drastically.
reduced its operating costs to reduce the deficit that needs to be met through additional revenues.
The structural deficit has existed for decades, exceeding S20 million in certain years. Previously,
the City was able to meet its General Fund needs through transfers from the City's Light &
Power Fund and one-time stop gap measures, such as the sale of real estate and other assets. Due
to a depressed economy, depleted assets, and bond covenant restrictions, those options are no
longer available, nor are they long-term solutions.
The City receives no or significantly less in General Fund revenues from sources traditionally
experienced by other cities (i.e. hotel tax, gas tax, vehicle license fees, sales and use tax, and
property tax). As a prime example, Vernon receives only 70/6 of its property tax revenues
collected by the County in comparison to the 20+1/6 received by cities like Los Angeles,
Pasadena, Long Beach, South Pasadena, and Pomona. With limited ability to increase revenues
from these sources, Vernon must seek alternative sources of revenue and levy them amongst its
taxpayers in the most equitable manner.
Recognizing that cost-cutting measures are of supreme importance in the City's efforts to
address the General Fund's structural deficit and achieve a balanced budget each fiscal year, over
the last three years, the City has reduced its current operating expenditures by over $6 million
and continues to seek ways to further reduce costs. The City is currently in the process of
implementing an early retirement incentive program that would further reduce costs by $8.1
million over the next five fiscal years.
With the anticipated success of the early retirement program, as of July 1, 2013, the City will
have reduced its workforce by 25% (81 employees) over the last five years. Through these
reductions, along with reductions to employee retirement and health care costs, and significant
reductions in consultant and outside legal costs, the City is saving $10 million annually. The
City is operating at its leanest possible staffing levels and continues to reevaluate and reorganize
in order to provide the most efficient and cost-effective service model.
Following are summaries of the three tax measures proposed in the attached resolutions.
Because of the "Exclusively Industrial" nature of the City, public safety services are uniquely
designed to meet such needs. In order to ensure the appropriate distribution of General Fund
costs among residential and non-residential uses, the City commissioned a cost -benefit analysis
study from NBS. The study concluded that non-residential properties and uses account for more
than 99% of all police and fire calls for service and General Fund expenditure allocations. As
such, the proposed Special Parcel Tax and Utility Users' Tax would be levied on non-residential
uses only.
Measure K — Business License Tax (Resolution No. 2013-01
Measure K proposes to the voters adoption of an ordinance to increase the City's existing
Business License Tax rates in accordance with Exhibit A of the resolution. The proposed
ordinance would also modify the method for calculating business license taxes on additional
square footage, multiple business activities at one location, and for contractors. Additionally, the
ordinance clarifies that leasing of real property by the owner of that property, absent some other
business activity, does not constitute a business that is subject to this tax.
The proposed increases to the Business License Tax rates are expected to generate an additional
$4.5 million in revenues.
Measure L — Special Parcel Tax (Resolution No. 2013-02
Measure L proposes to the voters adoption of an ordinance to levy an annual Special Parcel Tax
on non-residential parcels at a rate of $0.03 per square foot to fund public safety services and
projects. The proposed tax would be levied only on those parcels or portions thereof not subject
to the City's existing Warehouse Parcel Tax. The tax is proposed to sunset in 10 years (Fiscal
Year 2022-23).
The proposed Special Parcel Tax is expected to generate $1.9 million to fund essential Fire,
Health, and Police services and projects.
Measure M — Utility Users' Tax (Resolution No. 2013-03)
Measure M proposes to the voters adoption of an ordinance to levy a 1% Utility Users' Tax on
non-residential electricity, gas, telecommunications, video and water utility services. The
proposed tax would sunset 10 years after the date it takes effect.
The proposed Utility Users' Tax is expected to generate $1.6 million.
Fiscal Impact
The three -pronged tax proposal presented in this staff report is expected to generate
approximately $8 million in additional General Fund revenues to fund essential governmental
services, including public safety and health services.
Conclusion
The General Fund deficit is a decades -long problem that can only be resolved through
comprehensive, long-term revenue solutions and strict cost reductions and controls.
City staff has thoroughly examined all available options to reduce expenditures and generate
revenues. The expenditure reductions discussed in this staff report, along with additional
projected reductions to outside legal costs, represent a 22% decrease in General Fund operating
costs over a five to six -year period. The tax measures proposed in this staff report represent what
we believe to be an appropriate distribution of the revenue burden among Vernon's various
industries and taxpayers.
RECEIVED
RECEIVEC APR , 0 20I9'
APR I 1 2V GITY'ADMINISTRATION
CiTIrCLERK"sOFHU STAFF REPORT
City Clerk Department ,
DATE: April 16, 2013
TO: honorable Mayor and City Council
FROM: Dana Reed, Interim. City Cleric'DIP1
RE: A Resolution of the City Council of the City of'Vernon, California, Reciting
the Fact of the General Municipal Election held on April 9, 2613, Declaring
the Result and Such Other Matters as Provided by Law
Recommendation
It is recommended that the City Council:
I. Accept the Certificate of Canvass.
2. Adopt a Resolution declaring the results of the General Municipal Election held April 9,
2013, declaring that William J. Davis is elected to the office of member of the City
Council and that Measures K, L, and M are approved; and
3. Authorize the Interim City Clerk to deliver the Certificate of Election and administer the
oath of office to William J. Davis, and
4. Elect a Mayor and a Mayor Pro-Tem.
liackeround
On April 9, 2013, a General Municipal Election was held for the purpose of electing one member
to the City Council for the full term of five (5) years, and to submit to the voters of the City of
Vernon the following Measures:
Measure K:
PES
Shall an ordinance be adopted to increase the rates of the
City's existing business license taxes and to modify theO
method for calculating such taxes?
YES
Shall an ordinance be adopted to authorize, for a period of
ten years, the levy of an annual special parcel tax on non-
residential parcels at the rate of S0.03 per square foot
(adjusted annually for inflation) to fund (i) City fire
protection services and projects, (ii) City health services and NO
projects, and (iii) City police services and projects?
Measure M:
YES
Shall an ordinance be adopted to authorize, for a period of
ten years, the levy of a I % utility users' tax on electricity,
gas, telecommunications, video and water utility services,
with exemptions for residential services provided to persons NO
with disabilities and low income households?
As of the closing of the nomination period on January 14, 2013, at 5:30 p.m., William J. Davis
was the only official candidate. As of March 26, 2013, there were no requests for a write-in
candidate.
On March 18, 2013, seventy-three (73) vote -by -mail ballots were mailed. Subsequently, two
provisional ballots were issued, one for a new registered voter, and one as a duplicate to replace
a lost ballot.
Forty-two (42) ballots were received, verified for signature verification, and canvassed on April
9, 2013. The results of said canvassing are summarized in the City Clerk's Certification of
Canvass, and are to be incorporated as part of the proposed Resolution.
Fiscal Impact
There is no negative fiscal impact. An increase to the City's.General Fund revenue will result
from the approval of the tax measures.
DR/ab